Exploring the Impact of Soil Quality, Land Conditions, and Climate Variability on Smallholder Farmers Income Dynamics

ABSTRACT This study investigates how soil quality, climate variability, and land conditions shape the income dynamics of smallholder farmers in China's Yangtze River Basin using quantile regression, threshold regression, propensity score matching, and spatial econometric models on survey‐based household data collected across the region. The analysis revealed three principal findings. First, soil quality exhibits significant threshold effects: below the critical organic matter and nitrogen thresholds, marginal returns to soil improvements are substantially diminished, creating poverty traps for farmers on degraded land. Second, climate variability impacts are highly heterogeneous across income distributions—precipitation volatility reduces incomes for the lowest income quantile substantially more than for the highest quantile, with key climate thresholds intensifying negative effects for vulnerable groups. Third, land fragmentation and tenure security mediate these relationships, with secure tenure significantly increasing climate‐adaptation investment. The overarching conclusion is that smallholder income dynamics are shaped by complex interactions between environmental factors and household adaptive capacity, with wealthier farmers exhibiting significantly greater resilience due to differential access to adaptation technologies and irrigation. Policy interventions must be differentiated—expanding irrigation access, strengthening land tenure security for poor households, targeting soil health programs to farms below quality thresholds, and providing targeted support for low‐income farmers to adopt adaptation technologies—rather than uniform approaches to reduce vulnerability and promote sustainable incomes amid growing climate variability.